ROADRUNNER TRANSPORTATION SYSTEMS, INC. (RRTS) SPO
|Company Name||ROADRUNNER TRANSPORTATION SYSTEMS, INC.|
|Company Address||4900 S. PENNSYLVANIA AVENUE
CUDAHY, WI 53110
|CEO||Mark A. DiBlasi|
|Employees (as of 12/31/2011)||1848|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Exchange||New York Stock Exchange|
|Shares Over Alloted||0|
|Shareholder Shares Offered||100,000|
|Lockup Period (days)||180|
|Quiet Period Expiration||1/14/2013|
Based on an assumed offering price of $18.69 per share, which was the closing price of our common stock on the NYSE on December 4, 2012, we estimate that our net proceeds from the sale of our common stock in this offering will be approximately $59.5 million, after deducting the underwriting discount and estimated offering expenses payable by us. If the underwriters exercise their option to purchase 525,000 additional shares to cover over-allotments, we estimate that our net proceeds from the sale of our common stock in this offering will be approximately $68.7 million, after deducting the underwriting discount and estimated offering expenses payable by us. We intend to use approximately $52.0 million of the net proceeds from this offering to repay the outstanding indebtedness under the revolving line of credit included in our senior credit facility. Affiliates of certain of the underwriters are lenders under our senior credit facility. Our senior credit facility consists of a $170.0 million term loan and a revolving line of credit up to a maximum of $125.0 million, of which up to $10.0 million may be used for swing line loans (as defined in the third amended and restated credit agreement (referred to as the credit agreement)) and up to $25.0 million may be used for letters of credit. The senior credit facility matures on August 3, 2017. Advances under our senior credit facility bear interest at either (a) the Eurocurrency Rate (as defined in the credit agreement), plus an applicable margin in the range of 2.0% to 3.8%, or (b) the Base Rate (as defined in the credit agreement), plus an applicable margin in the range of 1.5% to 2.8%. At September 30, 2012, the average interest rate on our senior credit facility was 3.2%. We intend to use the remaining net proceeds from this offering for working capital and other general corporate purposes. We also may use a portion of the net proceeds from this offering to acquire businesses, products, services, or technologies that we believe to be complementary to our business. However, we do not have agreements or commitments for any specific acquisitions at this time. Our plans for the proceeds of this offering are subject to change due to unforeseen events and opportunities, and the amounts and timing of our actual expenditures depend on several factors. Other than as described above, we cannot specify with certainty the particular uses for the net proceeds to be received upon the closing of this offering. Accordingly, we will have broad discretion in using the net proceeds of this offering. We will not receive any of the net proceeds from the sale of shares of our common stock by the selling stockholder.
Competition in the transportation services industry is intense. Increased competition may lead to revenue reductions, reduced profit margins or a loss of market share, any one of which could harm our business. There are many factors that could impair our ability to maintain our current profitability, including the following: . competition with other transportation services companies, some of which have a broader coverage network, a wider range of services and greater capital resources than we do; . reduction by our competitors of their freight rates to gain business, especially during times of declining growth rates in the economy, which reductions may limit our ability to maintain or increase freight rates, maintain our operating margins or maintain significant growth in our business; . solicitation by shippers of bids from multiple carriers for their shipping needs and the resulting depression of freight rates or loss of business to competitors; . development of a technology system similar to ours by a competitor with sufficient financial resources and comparable experience in the transportation services industry; and . establishment by our competitors of cooperative relationships to increase their ability to address shipper needs.
We are a leading asset-light transportation and logistics service provider offering a full suite of solutions, including customized and expedited less-than-truckload, truckload and logistics, transportation management solutions, intermodal solutions (transporting a shipment by more than one
mode, primarily via rail and truck), freight consolidation, inventory management, and domestic and international air. We utilize a broad third-party network of transportation providers, comprised of independent contractors (referred to as ICs) and purchased power providers, to serve a diverse customer base in terms of end market focus and annual freight expenditures. ICs are individuals or small teams that own or lease their own over-the-road transportation equipment and provide us with dedicated freight capacity. Purchased power providers are unrelated asset-based over-the-road transportation companies that provide us with freight capacity under non-exclusive contractual arrangements. Although we service large national accounts, we primarily focus on small to mid-size shippers, which we believe represent an expansive and underserved market. Our business model is highly scalable and flexible, featuring a variable cost structure that requires minimal investment in transportation equipment and facilities, thereby enhancing free cash flow generation and returns on our invested capital and assets. We have three operating segments: Less-than-Truckload. Our less-than-truckload (referred to as LTL) business involves the pickup, consolidation, linehaul, deconsolidation, and delivery of LTL shipments throughout the United States and into Mexico, Puerto Rico, and Canada. With a network of 35 LTL service centers and over 200 third-party delivery agents, we employ a point-to-point LTL model that we believe serves as a competitive advantage over the traditional hub and spoke LTL model in terms of faster transit times, lower incidence of damage, and reduced fuel consumption. Our LTL segment also includes domestic and international air transportation services. Truckload and Logistics. Within our truckload and logistics (referred to as TL) business, we arrange the pickup, delivery, and inventory management of TL freight through our network of 30 TL service centers, 4 freight consolidation and inventory management centers, 14 company dispatch offices, and 80 independent brokerage agents primarily located throughout the eastern United States and Canada. We offer temperature-controlled, dry van, intermodal drayage, and flatbed services and specialize in the transport of refrigerated foods, poultry, and beverages. We believe this specialization provides consistent shipping volume year-over-year. Transportation Management Solutions. Within our transportation management solutions (referred to as TMS) business, we offer a “one-stop” transportation and logistics solution, including access to the most cost-effective and time-sensitive modes of transportation within our broad network. Specifically, our TMS offering includes pricing, contract management, transportation mode and carrier selection, freight tracking, freight bill payment and audit, cost reporting and analysis, and dispatch. Our customized TMS offering is designed to allow our customers to reduce operating costs, redirect resources to core competencies, improve supply chain efficiency, and enhance customer service. Our success principally depends on our ability to generate revenues through our network of sales personnel and independent brokerage agents and to deliver freight in all modes safely, on time, and cost-effectively through a suite of solutions tailored to the needs of each customer. Customer shipping demand, over-the-road freight tonnage levels, and equipment capacity ultimately drive increases or decreases in our revenues. Our ability to operate profitably and generate cash is also impacted by purchased transportation costs, fuel costs, pricing dynamics, customer mix, and our ability to manage costs effectively. Within our LTL business, we typically generate revenues by charging our customers a rate based on shipment weight, distance hauled, and commodity type. This amount is typically comprised of a base rate, a fuel surcharge, and any applicable service fees. Within our TL business, we typically charge a flat rate negotiated on each load hauled. Within our TMS business, we typically charge a variable rate on each shipment, in addition to transaction or service fees appropriate for the solution we have provided to meet a specific customer’s needs. We incur costs that are directly related to the transportation of freight, including purchased transportation costs and commissions paid to our agents. We also incur indirect costs associated with the transportation of freight that include other operating costs, such as insurance and claims. In addition, we incur personnel-related costs and other operating expenses essential to administering our operations. We continually monitor all components of our cost structure and establish annual budgets, which are generally used to benchmark costs incurred on a monthly basis. -------- We maintain our principal executive offices at 4900 S. Pennsylvania Ave., Cudahy, Wisconsin 53110, and our telephone number is (414) 615-1500. Our website address is www.rrts.com.
|Auditor||Deloitte & Touche LLP|
|Company Counsel||Greenberg Traurig, LLP|
|Lead Underwriter||Robert W. Baird & Co. Incorporated|
|Transfer Agent||American Stock Transfer & Trust Company, LLC|
|Underwriter||BB&T Capital Markets, a division of Scott & Stringfellow, LLC|
|Underwriter||Raymond James and Associates, Inc|
|Underwriter||Raymond James and Associates, Inc.|
|Underwriter||Stifel Nicolaus & Company, Incorporated|
|Underwriter||SunTrust Robinson Humphrey, Inc|
|Underwriter Counsel||Foley & Lardner LLP|
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